By Nikhil Nainan and Scott Murdoch
(Reuters) -Australian buy-now-pay-later company Afterpay said on Tuesday it is exploring a U.S. listing after North America became its biggest market, offering global investors an easier path to owning a stock that has boomed through the pandemic.
Afterpay has tapped Goldman Sachs (NYSE:GS) to advise on the listing, two sources with direct knowledge of the matter told Reuters. Goldman declined to comment.
The Melbourne-based firm was last valued at nearly A$37 billion ($28.7 billion) despite never having posted a profit, thanks to the coronavirus-driven surge in online shopping and rapid expansion in overseas markets including the United States.
Releasing its third-quarter results on Tuesday, Afterpay said North America sales had nearly tripled, overtaking Australia and helping to double the total value of transactions it processed to A$5.2 billion compared with a year earlier.
A U.S. listing would likely further open up the Australian fintech star to an investor base that lends greater weight toward growth, and also potentially provide easier access to capital to fund expansion plans.
Afterpay co-CEO Nick Molnar, who co-founded the company in 2015, told Reuters it was a "proud Australian-headquartered organisation" but a U.S. listing could provide "attractive opportunities".
"The prioritisation on exploring a U.S. listing is purely around does it provide the business more operating leverage from the perspective of being present in the market that is now the greatest contributing segment ... and provide us the right investor base," he said.
Afterpay said in a statement it planned to remain headquartered in Australia, but did not specify if a U.S. market debut would be based on a dual-listing structure or result in it giving up its Australian berth. It also did not give a timeframe.
In North America Afterpay is pitted against Affirm, Zip Co's Quadpay, new entrant PayPal and Sweden's Klarna, which is valued at $31 billion and looking at a direct listing in the United States.
Affirm's $17 billion valuation was based on 4.5 million shoppers while Afterpay had 14.6 million, implying a valuation over $47 billion, said Emanuel Datt, founder of Datt Capital which bought Afterpay shares around A$7.00 in 2018.
"U.S. investors are generally willing to pay a higher multiple for a growth business like Afterpay. That is related to the deeper pools of capital that are available ... relative to Australia," Datt said.
Shares of Afterpay were trading flat at A$126.17 by midsession on Tuesday, compared to a slight dip in the broader market. The stock is up more than 200% since its pre-pandemic high in Feb 2020.
Afterpay's growth has slowed in Australia and this year it will likely face margin pressure as the country's biggest bank and PayPal launch BNPL offerings with a promise of lower fees.
The company last month launched in parts of mainland Europe and plans to move into Asia. Its self-branded savings accounts linked to Westpac Banking Corp are expected to go live later this year.
($1 = 1.2845 Australian dollars)